Report: Benefits of ROADMs offset challenges of market maturity

MARCH 20, 2008 -- The market has grown at breakneck speed, aided by a significant and sudden spurt in bandwidth usage in the initial years and still continues to maintain a good growth rate, say Frost & Sullivan analysts.

MARCH 20, 2008 -- New analysis from Frost & Sullivan (search for Frost & Sullivan) finds that the reconfigurable optical add/drop multiplexer (search for ROADM) market earned revenues of $383 million in 2007. Analysts estimate the market will reach $810 million in 2013.

Since their introduction in 2003, ROADMs have revolutionized the operation of communication networks. The market has grown at breakneck speed, aided by a significant and sudden spurt in bandwidth usage in the initial years and still continues to maintain a good growth rate, say analysts.

"As ROADMs allow networks to be reconfigured using software from a network operation center (NOC) and eliminate the need for additional equipment or manpower at the site, they provide more flexibility and reduced operational cost than dense wavelength division multiplexers (DWDMs)," explains Frost & Sullivan research analyst Jaydeep Bhattacharjee. "ROADMs' ease of maintenance is a huge help to network carriers in tackling the problems associated with unpredictable and irregular growth in bandwidth-in-demand."

According to the report, the growth of the global ROADM market has bowled over market watchers; however, once its speed is spent, the market could become more competitive. This market maturity will prompt companies to increasingly focus on research and development (R&D) and marketing.

Most ROADM businesses have already begun investing handsomely in R&D to produce more advanced components and systems, despite the huge gap between R&D initiation and completion and irregular demand for finished products. The market's intense focus on R&D will not only help it gain market share over its fixed counterpart--DWDMs--but will also ease the pressure on its steeply priced products, contend Frost & Sullivan analysts.

Robust R&D infrastructure is imperative in a market that experiences constant drops in prices and hikes in production and marketing expenses. Manufacturers have to price their products competitively to survive in this aggressive market.

"Since prices have reached a level where companies can sustain growth only at large volumes, manufacturers have to make an extra effort to provide better and more effective customer care," observes Bhattacharjee. "They should also show a keenness to meet the exact requirement of their customers by providing them with the right solution package."

So far, ROADMs are still more expensive than DWDMs. However, as manufacturers are working on providing better and more integrated equipment at lower costs, this scenario is expected to change, and ROADMs will find higher uptake in the developing countries as well.

"World Opto ROADM Market" is part of the Electronic Devices Growth Partnership Service program, which includes research in power generation and transmission and distribution.

Visit Frost & Sullivan

More in Market Research